Ministry of Petroleum & Natural Gas
Year End Report 2018- Ministry of Petroleum & Natural Gas
Under OALP Bid Round I, 55 Blocks having area of 59,282 sq. Km awarded;
Second Bidding Round under DSF Policy offering 59 discoveries launched;
Development of additional 13500 Km long gas pipeline under way;
More than 5.83 crore LPG connections released under Ujjawala scheme;
Supply of BS-VI fuel commences in NCT of Delhi;
Remunerative price fixed for ethanol procurement based on raw material utilized for ethanol production
Energy is a key driver of economic growth and the Government’s focus has been to bring about transformational changes in the energy landscape of India to fulfil the twin objectives of energy justice and climate justice. The Petroleum and Natural Gas Ministry has endeavored to “Reform, Perform and Transform’ the sector. The government has taken several reforms and accomplished major task with far-reaching impacts in the sectors of Exploration and Production, Refinery, Marketing, Natural Gas and international cooperation.
1. Exploration & Production
A number of new initiatives have been taken in the last one year to promote Exploration and Production activities in the country. In a major policy drive to give a boost to petroleum and hydrocarbon sector, the Government has unveiled a series of policy reforms. Some of the notable Policy reforms are listed as under:
i. Hydrocarbon Exploration and Licensing Policy / Open Acreage Licensing Policy  – This is a paradigm shift from Production Sharing Contract  regime to Revenue Sharing Contract  regime based on the principle of ease of doing business. It provides for single License for exploration and production of conventional as well as non-conventional Hydrocarbon resources; Pricing and Marketing Freedom; reduced rate of royalty for offshore blocks, Open Acreage Licensing Policy that means option to select the exploration blocks without waiting for formal bid round. Expression of Interest can be submitted round the year and Bidding is carried out every 6 months.
Under OALP Bid Round I, 55 Blocks having area of 59,282 sq. Km have been awarded on 1st October, 2018. OALP Bid Round II with 14 blocks is in the offering.
ii. Policy Framework to Promote and Incentivize Enhanced Recovery Methods for Oil and Gas- The Government has approved the Policy framework to promote and encourage adoption of Enhanced Recovery /Improved Recovery /Unconventional Hydrocarbon  production Methods/techniques through fiscal incentives and an enabling ecosystem to improve productivity of existing fields and enhance overall production of domestic hydrocarbons. The Policy provides for systemic assessment of every field for its ER potential, appraisal of appropriate ER techniques and fiscal incentives to de-risk the cost involved in ER Projects and to make it economically viable.
iii. Discovered Small Field Policy  Policy, Round I & II - For early monetization of unmonetized discoveries of National Oil Companies , Cabinet in September, 2015 approved 69 marginal fields for offer under Discovered Small Fields Policy. These contract areas are awarded under the new regime of Revenue Sharing Model. Award of contract is expected to provide faster development of fields and facilitate production of oil and gas.
The First bidding round under the Discovered Small Field Policy was launched on 25th May 2016, thereby offering 67 discovered small fields in 46 contract areas of ONGC and OIL for international bidding. Total 30 contracts for 43 discovered small fields were signed with 20 companies in March, 2017. It is expected that in-place locked hydrocarbons volume of 40 MMT oil and 22.0 BCM of gas will be monetised over a period of 15 years.
On 7th February, 2018, Cabinet has approved the Discovered Small Field Policy Bid Round-II, an extension of the Discovered Small Field Policy notified on 14.10.2015. Under DSF-II, 59 discovered small fields/unmonetized discoveries estimated to have 194.65 Million Metric Ton  Oil and Oil equivalent gas in place are offered for bidding.
The Second Bidding Round under DSF Policy offering 59 discoveries clubbed into 25 new Contract Areas was launched on 9th August, 2018.
iv. National Seismic Programme of Un-appraised areas – The Government has taken up programme of undertaking 2D seismic survey of entire un-apprised areas. National Seismic Programme was launched on 12th October, 2016. Under the programme, Government has approved the proposal for conducting 2D seismic survey for data Acquisition, Processing and Interpretation  of 48,243 Line Kilo Metres . The estimated cost of the project is Rs.2932.99 crore and the project is proposed to be completed by 2019-20.
As on 31st October, 2018, surface coverage of 28485 LKM, out of 48,243 LKM has been achieved under 2D Seismic data acquisition under National Seismic Programme.
v. Policy Framework for streamlining the working of the Production Sharing Contracts- Under this Policy, Government has allowed 2 years extension in exploration period and 1 year in Appraisal period for operational blocks in NER besides allowing marketing including pricing freedom for natural gas produced in future in NER; sharing of the statutory levies including royalty & cess in Pre-NELP Exploration Blocks and to be cost recoverable with prospective effect; extending tax benefits under Section 42 of Income Tax, 1961 to operational blocks under Pre-NELP discovered fields prospectively.
vi. Re-assessment of Hydrocarbon Resources – A Multi Organisation Team  comprising of representatives of ONGC, OIL and DGH has carried out estimation of hydrocarbon resource potential in the country. The prognosticated conventional hydrocarbon resources in 26 sedimentary basins of the country are of the order of 41.87 billion tones , which is about 49% increase as compared to earlier estimates of 28.08 billion tones.
vii. Policy Framework for Exploration & Exploitation of Unconventional Hydrocarbons under Existing Production Sharing Contracts , Coal Bed Methane  Contracts & Nomination Fields- Government has approved the policy to encourage the existing Contractors in the licensed/leased area to unlock the potential of unconventional hydrocarbons in the existing acreages. Under this policy, an area of 72,027 sq. km. held under PSCs and 5269 sq. km area under CBM contracts has been opened up for simultaneous exploration and exploitation of conventional or unconventional hydrocarbons.
2. Natural Gas
i. Natural Gas Grid
In order to promote the usage of natural gas as a fuel/feedstock across the country and move towards a gas based economy, the development of additional 13500 Km long gas pipeline is under way to complete the Gas Grid. The status of major under-construction gas pipeline project is as under:
- Pradhan Mantri Urja Ganga Project ):The 2655 km. pipeline project is being executed at an investment of Rs.12,940 Crore, which includes 40% capital grant  from the Government of India and the project is scheduled to be completed progressively by December, 2020. JHBDPL will cater to the energy requirements of five states, namely Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal. Construction work on Section 1 of JHBDPL project  is at advanced stage and the same is expected to be commissioned shortly. Part pipeline section upto Varanasi has been operationalized to commence gas supply for Varanasi City Gas Distribution  network. Further line pipe procurement and pipe laying work for balanced section  has also been awarded and construction is in progress.
- Barauni to Guwahati Pipeline: To extend the Gas Grid upto North East, development of a 729 Km long pipeline from Barauni to Guwahati has been allowed as an integral part JHBDPL project. This pipeline will pass through the Bihar, West Bengal, Sikkim & Assam .Pipe procurement and laying work tenders are under progress. This project is scheduled to be commissioned by December 2021.
- North East Region Gas Grid: To further extend the gas grid to each states of North-East and Sikkim, a Joint Venture  company, named as Indradhanush Gas Grid Ltd, has been formed by five Oil & Gas Central Public Sector Undertakings  i.e. IOCL, ONGC, GAIL, OIL, & NRL on 10.08.2018. This JVC will develop NER Gas Gird of about 1656 Km long in all North Eastern States i.e. Assam, Sikkim, Mizoram, Manipur, Arunachal Pradesh, Tripura, Nagaland and Meghalaya in a phased manner at the total cost of about Rs. 9265 Crore. PNGRB has also issued provisional authorization to IGGL on 14.09.2018 for the development of North-East gas pipeline grid. On completion, NER grid will ensure uninterrupted availability of natural gas across the region and boost industrial growth in the region.
- Kochi-Koottanad-Bangalore-Mangalore Pipeline : GAIL is developing 872 km long pipeline at the investment of Rs 5150 Crore in the State of Kerala & Tamilnadu. Construction work in the State of Kerala is at advanced stage and is expected to be completed by mid of 2019. Further, pipeline laying work to connect Tamilnadu has also been commenced and work is under progress.
- Ennore-Thiruvallur-Bengluru-Puducherry-Nagapatinam-Madurai-Tuticorin Pipeline :Indian Oil is developing a 1385 Km pipeline at the investment of Rs. 4497 Crore. This pipeline will pass through the State of Tamilnadu, Andhra Pradesh & Karnataka. Part section  laying work is under progress. Further, award for pipe and laying work for the remaining pipeline sections are under process.
- Other gas pipeline projects to complete the Gas Grid are also at various stages of implementation and are being executed in phased manner.
ii. City Gas Distribution  Network
To make available natural gas to public at large, Government has put strong emphasis on expansion of City Gas Distribution  network coverage across the country. CGD networks ensures the supply of cleaner fuel  to households, Industrial & commercial units as well as transportation fuel  to vehicles. Till 2017, only 19% of the country’s population spreading over 11% of the country’s area was covered for development of CGDs in 96 Geographical areas. To boost the CGD sector, 9th CGD Bidding Round was launched in April, 2018 for 86 Geographical Areas  covering 174 districts in 22 States/ Union Territories of the country. 38 entities  participated in this round and submitted total 406 bids for all 86 GAs. As of now, 84 GAs has been authorized to the successful bidders for the development of CGD networks. Hon’ble Prime Minister, on 22nd November 2018, has laid the foundation stone for the development of CGD projects in 61 newly authorized GAs covering 129 districts spreading over 17 States/UTs as well as launched the next round  of CGD bidding for 50 GAs. With the conclusion of 10th round, it will expand the coverage of CGD networks to about 70% country’s population spreading over 50% of India's area. The growth of CGD coverage has potential to attract total investment of more than Rs 1,20,000 Crore in gas value chain with generation of about 3 lakh employment opportunities in coming years.
iii. Liquid Natural Gas  Re-gasification
To meet the increased gas demand in the country, different entities are importing Liquefied Natural Gas  from global gas markets. The import of LNG is being carried out at existing four  LNG terminals which have regasification capacity of about 26.3 MMTPA . The terminal-wise details and their expansion plans are as under
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Location
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Owner
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Capacity

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Dahej
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PLL
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15
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Hazira
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SHELL
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5
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Kochi
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PLL
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5
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Dhabol|
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GAIL
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1.3
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Total Capacity 
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26.3

On 30th September, 2018, Hon’ble Prime Minister inaugurated the Mundra LNG project which has been developed by GSPC LNG Limited. This terminal has the capacity to handle 5 MMTPA of LNG. In addition, two new LNG terminals of 5 MMTPA capacity each located at Ennore  and Dhamra  are also under development at present.
3. Marketing
- Pradhan Mantri Ujjwala Yojana 
In order to provide clean cooking fuel LPG to BPL households in the country, the Government has launched “Pradhan Mantri Ujjwala Yojana” scheme to provide to provide 5 Crore deposit-free LPG connections to women belonging to the Below Poverty Line  families, which were subsequently increased to 8 Crore with a budgetary allocation of Rs. 12800 crore. Beneficiaries are identified through Socio Economic Caste Census  list and in case the names are not appearing in the SECC list, beneficiaries are identified from categories i.e. SC/STs households, beneficiaries of Pradhan Mantri Awas Yojana , Antodaya Anna Yojana , Forest dwellers, Most backward Classes , Tea & Ex-Tea Garden Tribes and people residing in Islands/ river islands.
The initial target of 5 crore connections was achieved well before the target i.e.31st March, 2019. As on 05.12.2018, more than 5.83 crore connections have been released under the scheme. Implementation of PMUY has resulted in significant increase in national LPG coverage, in general and Eastern States, in particular. The World Health Organization  has appreciated the efforts of the Government and termed it as a decisive intervention to check the indoor health pollution being faced by the women of the country.
- PAHAL
Government, as a measure of Good Governance, has introduced well targeted system of subsidy delivery to LPG consumers through PAHAL. The initiative of the Government was aimed at rationalizing subsidies based on approach to cut subsidy leakages, but not subsidies themselves.
As on 06.12.2018, more than 23.08 crore LPG consumers have joined the PAHAL Scheme. PAHAL has entered into Guinness book of World record being largest Direct Benefit Transfer scheme. So far, more than Rs. 96,625 crore have been transferred into the bank accounts of consumers.
PAHAL has helped in identifying ‘ghost’ accounts, multiple accounts and inactive accounts. This has helped in curbing diversion of subsidized LPG to commercial purposes. So far, estimated savings due to implementation of Pahal is approximately Rs 50,000 crore.
- Automation at OMC ROs
To enhance customer confidence through Q&Q  of fuel and minimizes chance of fraudulent transactions, this Ministry has given target to OMCs to automate all ROs across the country wherever feasible. As on 01.11.2018, 40354 ROs  have been automated across the country.
- Promotion of Digital Payments Undertaken by MoP&NG
There has been a significant expansion of digital payment infrastructure at retail outlets. As on 20.11.2018, 100876 POS terminals and 92408 e-wallet facility have been provided at 53717  petrol pumps across the country, 52959 retail outlets have been enabled with BHIM UPI. All the LPG Distributors and City Gas distribution companies are enabled with BHIM UPI.
- Retail Outlet Dealer Selection Advertisement Released
Expansion of retail outlet network  is undertaken by Oil Marketing Companies primarily to meet the growing fuel needs and convenience of customers in emerging markets like upcoming highways, agricultural pockets and industrial hubs. The Retail Outlet network in Rural, remote and far-flung areas are also being expanded with the intention of reaching product, ensuring quality and correct price to meet the rural agricultural demand and people living in remote areas. Additionally, the expansion of Retail outlet network is expected to generate employment opportunities also.
Oil Marketing Companies  have issued advertisements for 55652 locations across thirty States inviting applications from prospective candidates for setting up of Petrol pumps on 25th November, 2018. Advertisements for the five Assembly poll bound States will be released after the model code of conduct is lifted.
For the first time, computerized “Draw of Lots”/”Bid opening” would be held under the aegis of an independent agency to bring in more transparency. All Retail outlets will be constructed with latest technology including automation.
4. Refinery
Out of the 23 refineries operation in the country, 18 are in public sector, 3 are in private sector and two as a joint venture with a total refining capacity of 247.566 MMTPA. Out of the refining capacity of 247.566MMT, 142.066 MMT is in the public sector, 17.30MMT in joint venture and the balance 88.2 MMT is in the private sector. The country is not only self-sufficient in the refining capacity for its domestic consumption but also exports sufficient quantity of petroleum products.
5. Auto Fuel Vision and Policy
i. Introduction of BS-IV & BS-VI fuels in the Country:
- Ministry of Petroleum & Natural Gas vide order dated 19.01.2015 has notified for implementation of BS-IV Auto Fuels in the entire country w.e.f. 01.04.2017 in a phased manner. Accordingly, BS-IV Auto Fuels has been implemented in the entire country w.e.f 01.04.2017.
- It has also been decided that the country will leapfrog directly from BS-IV to BS-VI fuel standards and BS-VI standards will be implemented in the country w.e.f. 01.04.2020.
- Considering the serious pollution level in Delhi, Government has commenced supply of BS-VI in NCT of Delhi w.e.f. 01.04.2018.
ii. Ethanol Blended Petrol  Programme
For ethanol supply year 2018-19, the Government has fixed remunerative price for ethanol procurement based on raw material utilized for ethanol production as follows:
- From C-heavy molasses at Rs. 43.46 per litre.
- From B heavy molasses / partial sugarcane juice at Rs.52.43 per litre.
- Price of ethanol for the mills, who will divert 100% sugarcane juice for production of ethanol thereby not producing sugar, has been fixed at Rs.59.19 per litre. This price will be paid by OMCs to those sugar mills who will divert 100% sugarcane juice for production of ethanol thereby not producing any sugar. If a sugar mill produces ethanol with a combination of B heavy molasses and sugarcane juice, the ethanol price derived from B heavy molasses route shall be payable by OMCs.
- Further, the Government has also allowed production of ethanol from damaged food grains. OMCs are offering differential pricing of Rs. 47.13 per litre to incentivize this route.
- For the previous ethanol supply year 2017-18, the blending quantity of ethanol with petrol was 149.54 crore litres and the average blend percentage was 4.19 % which is the highest in the history of EBP Programm
- Subsequent to amendment in Industries  Act, 1951, giving control on production, movement and storage of ethanol to the Central Government, Central Government has been regularly interacting with the State Governments and other stakeholders to resolve the bottlenecks in smooth implementation of EBP Programme. Till now, Nine States have already implemented the amended provisions.
- The proposal to reduce GST on denatured ethanol meant for EBP Programme was initiated by this Ministry with Department of Revenue, Ministry of Finance. Based on the said proposal, Government has reduced the GST rate on ethanol meant for EBP Programme from 18% to 5%.
- Department of Food & Public Distribution has introduced a Scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity. This Scheme aims to infuse Rs. 1332 crore via Interest Subvention route. Under this Scheme, 114 proposals worth Rs. 6139.08 crore have been approved which are estimated to add 200 crore litres per annum of ethanol distillation capacity. In furtherance, in line with the decision taken in the meeting of PS to PM dated 21.09.2018 on “Ease of doing business and reduction in time taken for setting up of sugar related Distilleries”, MoP&NG has developed a format to monitor the progress, identify red flags and share it with distilleries. In this regard, Joint meetings with Project Proponents were held on 10.10.2018 and 13.11.2018. Further, MoP&NG has written letter to State Govt. of Karnataka, UP, Maharashtra, Madhya Pradesh and Uttarakhand for facilitating implementation of financial assistance scheme on 16.10.2018.
III. Bio-diesel Programme
- Purchase Orders have been issued by Oil Marketing Companies for supply of 8.14 crore litres of biodiesel during the period May – October, 2018, with provision for extension for three months.
- As on 30.10.2018, OMCs have procured 7.97 crore litres of Biodiesel.
iv. Second Generation Ethanol
- Subsequent to opening up of alternate route i.e. Second Generation  route for ethanol production, Oil Marketing Companies are in the process of setting up 12 2G bio-refineries with an investment of Rs.10,000 crores.
- Detailed Feasibility Report  for some 2G Bio-ethanol plants has been prepared by Oil PSUs. One of the Oil PSU viz. Numaligarh Refinery Ltd. has formed a JV named Assam Bio-refinery Private Limited with M/s Chempolis Oy of Finland and M/s Fortum 3 BV of Netherlands in June, 2018. The ground breaking ceremony of 2G ethanol project in Bargarh, Odisha, proposed to be set up by BPCL, was held on 10.10.2018.
v. National Policy on Biofuels – 2018.
- The Government has notified National Policy on Biofuels 2018 on 8.6.2018 which is expected to give boost to the biofuel programme of the country. The major features of the Policy are as below:
- Categorization of biofuels as “Basic Biofuels” viz. First Generation  bio ethanol & biodiesel and “Advanced Biofuels” – Second Generation  ethanol, bio-CNG etc. to enable extension of appropriate financial and fiscal incentives under each category.
- Expanding the scope of raw material for ethanol production by allowing use of sugarcane Juice, sugar containing materials like sugar beet, sweet sorghum, starch containing materials like corn, cassava, damaged food grains like wheat, broken rice, rotten potatoes, unfit for human consumption for ethanol production.
iii. The Policy allows use of surplus food grains for production of ethanol for blending with petrol with the approval of National Biofuel Coordination Committee.
- With a thrust on Advanced Biofuels, the Policy indicates a viability gap funding scheme for 2G ethanol Bio refineries of Rs.5000 crores in 6 years in addition to additional tax incentives, higher purchase price as compared to 1G biofuels.
vi. Joining of Advanced Motor Fuels
Ministry of Petroleum and Natural Gas joined Advanced Motor Fuels , a Technology collaboration programme  under International Energy Agency  as Member on 9.5.2018. It is an international platform to promote collaboration in R&D for developing advanced motor fuels / alternate fuels with greater focus on improving fuel efficiency and reduced GHG emissions.
viii. SATAT Initiative
- The Ministry has decided to give vide publicity to the initiative of Sustainable Alternative Towards Affordable Transportation  by organising Road Shows at Bhubaneswar, Chandigarh and Lucknow to promote Compressed Bio Gas  production and use.
- Accordingly, First Road Show was organised at Chandigarh on 17.11.2018 by Public Sector Oil Marketing Companies IOCL, BPCL and HPCL. The event was attended by prospective entrepreneurs, technology providers, representatives of Punjab Energy Development Agency , Haryana Renewable Energy Development Agency , financial institutions, FICCI, CII, ASSOCHAM along with interested dealers / distributors and officers of OMCs. In the Road Show, the participants were informed about the SATAT initiative and entrepreneurs were encouraged to setup CBG plants and supply CBG to OMCs.
6. International Cooperation
- Overseas sourcing
- In February 2018, an Indian Consortium of OVL, IOCL and BPRL acquired 10% participating interest in Abu Dhabi’s offshore Lower Zakum oil field.
- The first long term LNG cargo from US arrived at Dhabol on 30th March 2018.
- In April 2018, IOCL acquired 17% stake in the Mukhaizna Oilfield, Oman.
- The first long term LNG cargo from Russia arrived at Dhahej on 4th June 2018.
ii. Important Agreements / Contracts
- Saudi Aramco and ADNOC signed a MoU in June 2018 to jointly develop and build an integrated refinery and petrochemicals complex promoted by Ratnagiri Refinery & Petrochemicals Ltd.  at Ratnagiri in Maharashtra.
- India and USA launched Strategic Energy Partnership Ministerial level Energy Dialogue process on 17th April 2018.
- PMs of India and Nepal launched the ground-breaking ceremony of India-Nepal petroleum products pipeline from Motihari to Amlekhgunj through live-streaming in New Delhi on 7th April 2018.
- A tripartite MoU was signed between Petronet LNG of India, Sri Lanka Ports Authority, and a Japanese company in April, 2018 to set up LNG terminal at Colombo.
- ISPRL and ADNOC  signed a restated Definitive Agreement on Oil Storage and Management on 10th February 2018 for filling 5.86 million barrels of crude oil in the Mangalore SPR facility.
- On 18 September, 2018, India-Bangladesh Friendship Pipeline was inaugurated by the Prime Ministers of India and Bangladesh.
- On 12th November, 2018 a MoU was signed between ISPRL and ADNOC for exploring participation of ADNOC in Padur SPR.
iii. Major International Conferences / Meetings:
- India hosted the 16th International Energy Forum  Ministerial Meeting from 10-12th April 2018 in New Delhi.
- The 2nd meeting of the International Think Tank  was held on 13th October 2018 to discuss the challenges and the way forward for the Indian Oil and Gas sector for the future.
- 3rd meeting of India-OPEC Energy Dialogue was held on 17th October 2018
- Minister PNG inaugurated the 2nd annual India Energy Forum by CERAWeek in New Delhi, from 14 - 16 October 2018.
- In October, 2018 Road Shows were held by ISPRL in New Delhi, Singapore and London to finalize PPP model for construction and filling of Phase-II Strategic Petroleum Reserves facilities proposed for construction.
7. Swachh Bharat Abhiyan
i. Ministry of Petroleum & Natural Gas received Swachh Bharat National Award for Swachhata Action Plan  2017-18 in Swachh Bharat National Award ceremony held on Gandhi Jayanti, 02nd October, 2018. MoPNG allocated a budget of Rs. 335.68 crore for SAP 2017- 18 and continuous monitoring through various apex level review meetings, MoPNG including Oil & Gas CPSEs, has achieved an expenditure figure of around Rs. 402 crore, showing an achievement of around 120%.
ii. As a precursor to the launch of the 150th birth year celebrations of Mahatama Gandhi, MoPNG observed Swachhata Hi Seva 2018  from 15th September to 2nd October, 2018. MoPNG led the SHS campaign from the front. Ministry has undertaken various initiatives which inter-alia include organizing Shramdaan at various locations, conducting rallies/walkathon/cyclothons to generate awareness about sanitation; distribution of jute bags to general public to make plastic free zone; organizing cleaning drives at tourist places; constructing toilets in schools, public places, etc., distributing sanitary and hygiene products and organizing health talks and health camps.